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Adding new jobs to the economy is always a good thing

In good times or bad, adding more jobs to the economy always equates to higher GDP, lower debt-to-GDP levels, lowered unemployment insurance expenditures, and higher revenues for governments from income tax and sales tax.

There are no examples where adding net jobs to an economy has resulted in a net loss to the economy

It’s positive for individuals too. Higher employment levels generally lead to higher incomes, small and large businesses notice increased revenue, and there is always the chance that companies may begin to expand their facilities and hire more staff to handle increased sales.

Which is why the case to add more renewable energy is so compelling

Over decades of time, mature industries have found ways to increase output with fewer employees.

In the Top 10 on the mature industry list, must certainly be hydro-electric power plants, followed by nuclear power plants, and gas-fired power plants. There we have astronomical installation costs and employment numbers — but once construction of the power plant is completed, only very low staffing levels remain to operate the power plant.

Which is very unlike the case with renewable energy. Why? Because once a multi-billion dollar hydro-electric dam is built, it’s built. You don’t need to build thousands of them per day.

It’s the same with multi-billion dollar nuclear power plants — all you need after the construction phase ends are a small number of highly trained people to monitor the various systems. And some security people. That’s it.

With solar panels, a factory must produce 1000 per day (or more, in the case of larger factories) every weekday. Suitable markets must be found, factories must be built/leased, production floors must be built, materials sourced, and the panels themselves must be designed and engineered, assembled, packed, shipped and accounted for. Accountants do what they must do, marketing people manage a steady train of media events, trade shows and advertising programs, and on and on it goes — and all of it is a part of the solar industry. That activity creates work for thousands of people, every workday of the year. (And that short description doesn’t begin to cover it)

Then there are the solar panel installers, the sales teams/estimators, and the companies that build the inverter systems, which is a whole other value chain.

The wind power industry can also make high employment/lower power plant cost claims — although wind turbines average about $1 million dollars each — as opposed to solar panels which mostly range from $10 each to $400 each, depending on their size and composition.

Renewable energy is hugely labour-intensive and many thousands of permanent jobs are created — quite the opposite of conventional power generation

There’s no doubt that global energy demand is growing, not only in the developed world, but in the developing world as well.

Each kind of energy (renewable and non-renewable energy) has it’s own pros and cons

One of them is that non-renewable energy requires far fewer person-years of employment over the lifetime of the power plant.

Renewable energy on the other hand, is a rapidly-growing manufacturing, installation, and marketing industry that requires evermore blue collar and white collar employees.

And now that solar power, wind power, and biomass power have reached — or are within months of matching (per kWh) price parity with non-renewable power plants — the question becomes;

Do we want to employ 1.3 persons full-time per MW, or do we want to employ up to 24 people full-time per MW?

For comparison purposes, the typical coal, gas, or nuclear power plant can supply 1000 MW (or 1 GigaWatt) of electrical generation capacity, while the average wind turbine can supply 1 MW each.

The average 1 MW wind turbine costs about $1 million apiece, so to get 1 GW of electrical generation capacity, you need to install 1000 of them (1000 x $1 million each = $1 billion total) and the installation and connection to the grid of that many turbines might take up to 24 months.

Each 1 GW installation of coal, gas, or nuclear power, costs well over $1 billion and can take up to 15 years to construction completion.

For example, the 2.4 GW nuclear power plant under construction in Vogtle, Georgia was originally planned to cost $14 billion, but due to construction and regulatory delays it may cost significantly more.

How much more, is difficult to say both in dollar cost and time frame.

At this point, the total cost may exceed $15.4 billion and it may take an extra year to complete — for a total of 2.4 GW of installed capacity over 11 years of construction and delays, at a total cost of $6.41 billion per GigaWatt. It won’t get any better than that, but it may get much worse.

The 10-year construction plan is already behind schedule by 14-months, and now faces an additional (up to) 18-month delay.

Southern Co. said the firms building its new nuclear power plant in Georgia estimate the project will be delayed 18 months, potentially costing the power company $720 million in new charges, company officials said Thursday. — ABC News

One point about Plant Vogtle (the official name of the plant) is that the two 1200 MW (1.2 GW) reactors are of the latest GE/Toshiba AP-1000 design, noted for their passive safety systems and many safety redundancies built into the power plant. If you’re going to build a nuclear power plant it might as well be the safest one!

As new capacity is added to global electrical grids, more of it is renewable energy

More utility companies are adding new renewable energy capacity as opposed to adding new non-renewable energy capacity due to faster installation time frames, fewer regulatory delays, the lack of fuel supply concerns going forward, and total installation cost per GigaWatt (GW).

It’s easy to visualize this in the chart below.

In 2013, of the 207 GW added to the world’s electrical grids — renewable energy accounted for 120 GW of new installations, while 87 GW accounted for non-renewable energy.

Once the 2014 numbers are released to the public, the renewable energy statistic will have improved over 2013’s numbers. And 2016 should easily surpass the 70/30 metric.

As renewable energy displaces non-renewable energy additions to the grid — remember that renewable energy gets only 1/4 of the subsidies that fossil fuel energy gets!

Imagine if renewable energy got the same subsidies per kWh, or per GigaWatt of capacity, as non-renewable energy

In practical terms, it would mean that 100% of all new generation would soon be renewable energy, everywhere that subsidy-parity was the law.

Also, the renewable energy manufacturing sector would need to quickly ramp-up to meet demand — meaning many hundreds of thousands of permanent jobs would be created immediately after the levelized subsidy was announced.

Between 2017-2019 — and even with the higher subsidies enjoyed by coal, nuclear, and oil & gas — it will cost less to install new renewable energy power plants than to install new non-renewable energy power plants.

Germany is one of the countries leading the transition to renewable energy

Due to German public pressure in the aftermath of the Fukushima-Daiichi incident in March 2011, Germany shut down nearly half of their nuclear power plants and were forced to accelerate their transition timeline to renewable energy.

This unexpected development created additional costs for Germany, but regardless, their Energiewende program is still a stunning renewable energy success story.

Although progress has slowed from the frenetic pace of 2011-2013, Germany is very much a world leader in the transition to renewable energy.

Renewable energy was the number one source of power generation for the first time ever.

Renewables gained slightly in 2014 and now comprise 27.3 percent of domestic demand.

There is no doubt that the world will transition to renewable energy, and even major oil companies like Shell and BP are in agreement that by the year 2100, almost 95% of all energy demand will be met by renewable energy.

In one scenario, Shell says that by 2060 the largest energy provider will be solar power.

How quickly that energy transition will occur — is what the present conversation is all about

Everyone knows that Royal Dutch Shell is a giant in the global petroleum industry, but did you know that Raízen (Shell and Cosan’s joint biofuel venture) is Brazil’s 3rd-largest energy company?

Now Shell the petroleum giant and Cosan the sugar giant have teamed up to invest $1 billion dollars over the next 10 years in 2nd generation biofuels sourced from sugarcane.

Raízen, the joint biofuel venture between Royal Dutch Shell and Cosan Ltd. is the 3rd-largest energy company in Brazil. Image courtesy of Raízen.

The sweet part of this deal (apart from the sugarcane) is that both companies have committed to bring 1st generation biofuel production practices to an end, replacing those practices with 2nd generation technology, making Brazilian biofuels orders-of-magnitude cleaner.

Growing sugarcane for biofuel in Brazil usually means harvesting the cane of the sugarcane plant, leaving the rest of the plant behind. All of the ‘bagasse’ or ‘stover’ as it’s sometimes called, goes up in smoke as the fields are burned by the farmers twice per year. (Due to Brazil’s climate and nutrient-dense soil, sugarcane growth is explosive and Brazilian farmers can harvest 2 crops of sugarcane per year)

So much smoke and CO2 is generated from this 1st generation practice that NASA says it is able to detect changes in the Earth’s airmass for many weeks after millions of acres of sugarcane fields are burned in Brazil.

Happily, that’s going away now as Raízen will harvest the bagasse immediately after the main sugarcane harvest and process it with enzymes in cellulosic bioreactors, converting it into very pure ethanol.

All the benefits of ethanol biofuel — but without the (1st generation) drawbacks

Nothing will change with regards to the same fast, reliable, and simple process presently employed to produce biofuel from the sugarcane itself.

But harvesting the bagasse, changes everything as millions of acres of fields no longer need to be burned twice per year in order to remove the millions of tonnes of leftover plant material.

Due to advances in cellulosic biofuel technology, the leaves, roots and other parts of the sugarcane plant can be used in new cellulosic biofuel reactors (basically, a 500,000 gallon soup pot) to produce very high quality ethanol (or biodiesel, depending on the enzymes chosen and the process employed) at a moderate cost.

Raízen will increase their annual biofuel output by 50% to 1 billion litres — which is roughly equivalent to 106 million US gallons

No doubt that most of this newfound ethanol will be used to power cars within Brazil as all gasoline in the country must have a minimum 25% ethanol component — known as the E25 blend. If you choose the ‘other pump’ at the gas station, you can fuel your car with 100% ethanol, assuming your car is E100 compatible.

There are no longer any light vehicles in Brazil running on pure gasoline

Since 1976 the government made it mandatory to blend anhydrous ethanol with gasoline, fluctuating between 10% to 22%, and requiring just a minor adjustment on regular gasoline engines.

In 1993 the mandatory blend was fixed by law at 22% anhydrous ethanol (E22) by volume in the entire country, but with leeway to the Executive to set different percentages of ethanol within pre-established boundaries.

In 2003 these limits were set at a minimum of 20% and a maximum of 25%. Since July 1, 2007 the mandatory blend is 25% of anhydrous ethanol and 75% gasoline or E25 blend.

The Brazilian car manufacturing industry developed flexible-fuel vehicles that can run on any proportion of gasoline (E20-E25 blend) and hydrous ethanol (E100).

Introduced in the market in 2003, flex vehicles became a commercial success, reaching a record 92.3% share of all new cars and light vehicle sales for 2009.

By December 2009 they represented 39% of Brazil’s registered Otto cycle light motor vehicle fleet, and the cumulative production of flex-fuel cars and light commercial vehicles reached the milestone of 10 million vehicles in March 2010, and 15.3 million units by March 2012.

By mid-2010 there were 70 flex models available in the market manufactured from 11 major carmakers.

The success of “flex” vehicles, together with the mandatory E25 blend throughout the country, allowed ethanol fuel consumption in the country to achieve a 50% market share of the gasoline-powered fleet in February 2008.

In terms of energy equivalent, sugarcane ethanol represented 17.6% of the country’s total energy consumption by the transport sector in 2008. — José Goldemberg, the father of the Brazilian biofuel industry, as quoted by CleanTechnica.com

If all ethanol producers in Brazil follow Raízen’s lead, the country could soon be exporting millions of litres of very pure (clean burning) and very clean (sustainable agriculture practices) ethanol biofuel

As far as the cost is concerned, producing second generation cellulosic oil is more costly than that of ethanol, produced from other sources. Raizen’s Agro-Industrial Director, Joao Alberto Abreu, expects costs to decrease over time as enzymes needed for production become more easily available.

Brazil is the biggest ethanol producer in the world and one of the biggest exporters of biofuel.

Many ethanol producers have been struggling over the past few years but there are encouraging signs as domestic demand for ethanol is on the rise, while the opportunity to export cellulosic ethanol might grow in the near future.

It looks like 2nd generation biofuel production practices have won in Brazil. Competitors will be forced to emulate Raízen’s lead rather than continue to send millions of dollars worth of product up in smoke at each harvest

All in all, a very sweet deal. Congratulations to Shell and Cosan on their Raízen joint venture.